Multiemployer Withdrawal Liability

Question 1

When determining the UVB for a multiemployer plan withdrawal, what assumptions must you use?

Answer 1

Assumptions that are reasonable in aggregate, but no specific assumptions (Can rely on valuation)

Question 2

Explain the presumptive method for multiemployer withdrawal.

Answer 2

1. Calculate total UVB at plan year end
   preceding 09/26/80
2. Each year’s UVB is presumed to decrease
   5% of the original amount each year
3. Each year add a new layer at new UVB piece - 0.95prev - 0.9prev2 years ago…
4. Employer share of each pool is ratio of
   employer contributions to total - over five
   years preceding date each pool is
   established

Question 3

When calculating multiemployer withdrawal liability - what is the last year included for a withdrawing employer?

Answer 3

Year including the withdrawal date

Question 4

Explain the modified presumptive method for multiemployer withdrawal.

Answer 4

1. Calculate total UVB at plan year end
   preceding 09/26/80
2. This initial UVB is assumed to decrease
   based on 15 year interest amortization
3. Amount of second pool is total UVB less
   O/S amount of initial pool
4. Employer share of two pools based on 5 yr.
   employer contribution ratios

Question 5

What is Employer Withdrawal Liability?

Answer 5

Employer withdrawal liability is employer

share less the deductible

Question 6

Rolling Five Method Definition

Answer 6

1. Calculate UVB at plan year end preceding withdrawal
2. Employer share based on 5 yr.
   employer contribution ratios

Question 7

When would the deminimis not be available to an employer withdrawing from a multiemployer plan?

Answer 7

If substantially all the employers withdraw in the same year.

Question 8

Standard Deminimis Credit

Answer 8

Lesser of:

1. 0.75%*UVB
2. $50,000

Minus Max(UVB-100000, 0)

Question 9

Optional Deminimis Credit

Answer 9

Lesser of:

1. 0.75%*UVB
2. $100,000

Minus Max(UVB-150000, 0)

Question 10

When does a partial withdrawal because of a 70% decline occur?

Answer 10

When 30% of the units in 2 year average in the first 5 years of testing period exceeds each of the units in last 3 in the testing period

Question 11

When does a partial cessation of contribution obligations occur?

Answer 11

When the employer permanently ceases to be obligated to contribute under at least one (but not all) of bargaining agreements

Question 12

What is the amount paid for a partial withdrawal because of a 70% contribution decline?

Answer 12

Complete Withdrawal Liability * (1 - (base UNIT in year after 70% withdrawal/5 year UNIT average before 3-year testing period)

Question 13

What is the amount paid for a partial withdrawal because of a partial cessation of contribution obligations?

Answer 13

Complete Withdrawal Liability * (1 - (base UNIT in year after 70% withdrawal/5 year UNIT average before withdrawal)

Question 14

When is the amount paid for a partial withdrawal because of 70% contribution decline stopped early?

Answer 14

1. Any 2 consecutive years the employer’s base units are >= 90% of 2-year average used to determine 70% decline
2. Any 2 consecutive years the employer’s base units are >=30% of 2-year average and all other employers have base units >=90% of base units in withdrawal year

Question 15

What is the annual payment amount for withdrawal liability payments?

Answer 15

Product A and B
a) Highest contribution rate in 10 years
including year of withdrawal
b) Highest consecutive 3 year average of
hours in 10 years excluding year of
withdrawal

Question 16

How are partial withdrawal payments adjusted?

Answer 16

By the same amount as the liability is adjusted

Question 17

To determine the annual PAYMENT for a partial withdrawal, what years are used?

Answer 17

The 10 year period ending on first year of 3-year test period

Question 18

What is the cap on multiemployer withdrawal liability payments? When does it apply?

Answer 18

1. it is a 20-year cap

2. applies if not a mass withdrawal

Question 19

What is the frequency for multi employer withdrawal payments?

Answer 19

quarterly

Question 20

To determine when multiemployer withdrawal liability is paid off - what assumptions are used?

Answer 20

valuation assumptions

No interest in the year where withdrawal occurs